National Oilwell Varco Inc. (NOV:US), the largest U.S. maker of oil equipment, may have paid as much as $800 million for a Schlumberger Ltd. (SLB:US) pipe-distribution unit, according to JPMorgan Chase & Co.
National Oilwell Varco and Schlumberger didn’t disclose terms of the all-cash transaction in separate releases yesterday. Schlumberger’s Wilson unit sells pipes, valves, fittings and other tools for oil and natural-gas companies.
Wilson is expected to have sales of $2.7 billion this year with profit margin of 4 percent to 5 percent, J. David Anderson, an analyst at JPMorgan, wrote today in a note to investors. The segment is worth about six to seven times earnings before interest, taxes, depreciation and amortization, or $700 million to $800 million, he said.
Wilson is “a hardware store for the oilfield-services industry,” Anderson wrote. Houston-based National Oilwell Varco “has been building out its manufacturing capabilities to serve its distribution business, so adding Wilson provides even greater opportunities to expand the business.”
The deal is subject to regulatory approval, the companies said yesterday.
Loren Singletary, a spokesman for National Oilwell Varco, declined to comment on the estimated transaction value. Mary Jo Caliandro, a spokeswoman for Houston-based Schlumberger, had no comment.
Schlumberger climbed 1.3 percent to $68.12 at the close in New York. National Oilwell Varco rose 1.3 percent to $76.97.
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